IRS Begins Processing 'Extender' Deduction Claims

by Mike Godfrey, Tax-News.com, Washington

09 February 2007

The US Internal Revenue Service has started processing tax returns that claim key tax provisions renewed by legislation enacted in December.

After completing planned updates to its systems to accommodate the “extender” changes, the IRS began processing last weekend both e-file and paper tax returns claiming deductions for state and local sales taxes, higher education tuition and fees, and educator expenses.

The IRS emphasized that using e-file is the easiest and most accurate way to file a return, including any return claiming extender-related benefits. Makers of tax-preparation software have updated their products to incorporate these reinstated tax breaks.

“As we always do, we encourage taxpayers who think they may claim these deductions to file electronically,” announced IRS Commissioner Mark W. Everson, continuing: “They will get their refunds in half the time, and e-file greatly reduces the chance for making an error compared to using a paper return.”

While taxpayers using software will fill out their returns as normal, taxpayers claiming the extender provisions on paper returns will have to take special steps. Because the extender legislation was enacted after the new tax forms went to print last year, separate lines for the affected deductions were omitted from 2006 individual income tax forms. For that reason, people filling out a paper return must use existing lines on the current Form 1040 and Schedule A to claim the three major extenders provisions.

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